"I'm surprised that you have never written about Fannie Mae's new Payment Power program. It allows borrowers to skip payments, an option you have said was badly needed." I have indeed lamented the lack of payment flexibility in mortgages on many occasions. The Payment Power program (PPP), however, is a poor first step toward flexibility. I am not sure whether it will advance the cause or retard it. The PPP allows a borrower to skip up to two mortgage payments in any 12-month period, and up to 10 over the life of the loan. When a payment is skipped, the amount is added to the balance and a new (slightly higher) payment is calculated over the period remaining to term. In effect, the lender is making an additional loan, equal to the payment, at the original loan rate. This would be a nice option to have if it were free, but in fact it is very costly. Lenders charge both an upfront fee and a usage fee – some charge a high upfront fee and low usage fee and others do the opposite. ...
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